Today marks a pivotal moment for Byju's, the ed-tech giant, as its founder and CEO, Byju Raveendran, faces uncertainty ahead of an extraordinary general meeting (EGM) convened by investors. Led by global tech investor Prosus, shareholders seek to oust Raveendran and install a new board amidst the company's significant downturn.
Once lauded as one of India's most profitable start-ups, Byju's has suffered a drastic decline of nearly 90% in the past year, despite boasting a valuation exceeding $20 billion. The company, initially buoyed by the surge in demand for online learning during the Covid pandemic, now grapples with multiple crises. Key investors have withdrawn their support, Deloitte resigned as auditor, and a legal dispute with US lenders over a $1.2 billion loan further exacerbates the turmoil.
Ahead of the meeting, Byju's claimed that the Karnataka High Court had ruled any decisions made at the meeting would be "invalid" until the next hearing, asserting that the move is a mere "smokescreen" to disrupt the company's management and control. Despite the court order, the meeting will proceed, with the intention to push for Mr Raveendran's removal as CEO. Byju's alleges that investors, including General Atlantic and the Chan Zuckerberg Initiative - a venture of Facebook founder Mark Zuckerberg and his wife Priscilla Chan - violated shareholder agreements by calling for the meeting.
Adding to Mr Raveendran's problems, the Enforcement Directorate (ED) yesterday upgraded its Look Out Circular (LC) against him in connection with a Foreign Exchange Management Act (FEMA) probe. The Look Out Circular, initially issued over a year ago, has undergone recent modifications to address investor apprehensions and the evolving nature of the FEMA probe. The ED has requested the Bureau of Immigration to enhance the circular, to ensure that Mr Raveendran does not leave the country.